Mookerjee, J.:— This is an appeal from an order made under Sub-section 2 of Section 24 of the Provincial Insolvency Act of 1907. The events antecedent to the order may be briefly stated.
2. On the 3rd October, 1907, the respondent obtained a decree against the appellant in a mortgage suit.
3. The decree directed that the available proceeds of the sale to be held thereunder be paid in satisfaction of the decretal debt, but that if the amount due to the plaintiff was not satisfied by the sale of the mortgaged properties, the balance be realised from the other property and person of the defendant. The decree has been executed and the hypothecated properties have been sold, but a large sum is still due under the decree. In the case of a decree of this character, the period of limitation applicable runs not from the date of the sale of the mortgaged property, but from the date of the decree as fixed by Order 20, Rule 6 of the CPC; Khulna Loan Coy. v. Jnanendra Nath Bose (1). The same principle must be applied to test the applicability of Section 48 of the CPC which provides that where an application to execute a decree (not being a decree granting an injunction) has been made, no order for the execution of the same decree shall be made upon any fresh application presented after the expiration of twelve years from the date of the decree sought to be executed. Consequently, in the present case, the term of 12 years must be taken to run from the 3rd October, 1907.
4. It appears that on the 22nd June, 1918, the appellant made an application under Section 6 of the Provincial Insolvency Act, 1907, to be adjudged an insolvent. The adjudication order was made under Section 16(1) on the 4th April, 1919. The result of this adjudication order was that under Section 16(2), the whole of the property of the insolvent became vested in the Court and thereafter no creditor to whom the insolvent was indebted in respect of any debt provable under the Act could, during the pendency of the insolvency proceedings, have any remedy against the property or person of the in-solvent in respect of the debt or commence any suit or other legal proceedings, except with the leave of the Court and on such terms as the Court might impose. Under Section 16(4), a similar consequence followed in respect of all such property as might be acquired by or devolve on the insolvent after the date of the order of adjudication and before his discharge. Under Section 16(6), the adjudication order also related back and took effect from the date of the presentation of the petition on which it was made. On the 21st May, 1920, the respondent, as judgment-creditor of the insolvent, applied under Section 24 to have his name entered in the list of scheduled creditors, and the application was granted on the 9th June, 1920. The validity of this order is now questioned on the ground that on the 21st May, 1920, when the application under Section 24 was made, it had become impossible for the mortgagee decree-holder to apply for execution in the face of the provisions of Section 48 of the CPC. In our opinion, there is no room for doubt that this contention has been rightly overruled by the District Judge.
5. It is well-settled that a debt barred by the statute of limitation is not provable in bankruptcy proceedings. This rule was enunciated by Lord Eldon in Ex parte Dewdny (2) and was reaffirmed by him in Ex parte Roffey (3). But it is equally plain that the bar of time ceases to run (or to further run) after adjudication—as the effect of the bankruptcy is to vest the property of “the bankrupt in the trustee for the benefit of the creditors, and all personal remedies against the bankrupt are also thereafter stayed. This principles is deducible from the provisions of the Provincial Insolvency Act, 1907, which make it impossible for a creditor to take proceedings in execution after the adjudication order has been made and during the pendency of the insolvency proceedings. The rule has been recognised and applied in England in cases of high authority. In Ex parte Ross (4), this principle was enunciated by Vice-Chancellor Leach; on appeal against his order, Lord Lyndhurst observed that the effect of the commission in bankruptcy clearly is to vest the property in the assignee for the benefit of the creditors: they are, therefore, in fact trustees, and it is an admitted rule that unless debts are already barred by the statute of limitations when the trust is created, they are not afterwards affected by the lapse of time. The question was again raised in Ex parte Lancashire Banking Corporation (5) where Bacon, C.J, observed as follows:
“The argument founded on the statute of limitation as an answer to this claim is not tenable for a moment. The statute of limitation has nothing to do with the bankruptcy laws. When a bankruptcy ensues, there is an end to the operation of that statute, with reference to debtor and creditor. The debtor's rights are established and the creditor's rights are established in the bankruptcy and the statute of limitation has no application at all to such a case or to the principles by which it is governed.”
6. This rule has been recognized in later cases amongst others, in Re Croaley (6), Re Stock (7) and Re Cullwick (8). It may at first sight appear that in Re Bmzon (9) a different view was indicated. In that case debts were incurred by the bankrupt, before his two bankruptcies which occurred in 1890 and 1892. He was the donee of a general testamentary power of appointment and died in 1911, having exercised the power by his will but without having obtained his discharge. The Court held that the statute of limitations applied and that the creditors who had proved in the bankruptcy were barred and not entitled to be paid out of the appointed fund. Channell, J., in delivering the judgment of the Court stated that cases were quoted beginning with Ex parte Ross which showed that in the bankruptcy a debt does not become barred by lapse of time if it was not so barred at the commencement of the bankruptcy and of this there can be no doubt, but this is only in the bankruptcy. The learned Judge further added as follows: “The real difficulty in the way of the appellants is the well established rule that if the statute once begins to run it continues to run whatever happens.” No such difficulty however arises in the case before us because in the events which have happened the Court is not called upon to make an order for execution of the mortgage decree. Indeed under the provisions of the Provincial Insolvency Act if such application were made it would not have been entertained. Consequently there is no question of the applicability of Section 48 and the name of the respondent has been rightly entered in the list of scheduled creditors because at the time when the adjudication order was made the decree had not become barred by limitation nor had the right thereunder become extinguished by the application of the rule contained in Section 48.
7. The result is that the order of the District Judge is affirmed and this appeal dismissed with costs—one gold mohur.
8. Appeal dismissed.